Suppose a firm is in a range of production where it is experiencing economies of scale. Knowing this, we can predict that

A) the long-run average total cost curve is upsloping.
B) a 10 percent increase in all inputs will increase output by less than 10 percent.
C) a 10 percent increase in all inputs will increase output by more than 10 percent.
D) the firm is encountering problems of managerial bureaucracy because of its size.

Economies of Scale

Cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output decreasing with increasing scale.

Long-run Average Total Cost

The average cost per unit of output in the long run, where all inputs are considered variable and firms can adjust all factors of production.

Managerial Bureaucracy

A type of organizational structure that is characterized by a formal division of responsibilities, a clear hierarchy, and a detailed set of rules and procedures.